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jstratt

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  • Gilead: All Is Still Well Down On The Farm [View article]
    DTM

    I disagree but dont want to discuss further on this board. WMT and KO for all their capital expenditures are not growing the business. Those investments merely prevent decline.
    Feb 24, 2015. 02:06 PM | 1 Like Like |Link to Comment
  • Gilead: All Is Still Well Down On The Farm [View article]
    DTM

    I respect your argument and when I used GILDs own 2015 guidance I get almost your exact $2.46. But I like to look at things from different angles and free cash flow is one of my favorites.

    GILD is at a run rate of about $16 billion annual FCF. To put that in perspective it is 26% more than WMT, 3 times that of KO and neck and neck with JNJ. All of those are much higher in market cap and perhaps should be.

    The valuation of GILD in relation to WMT and JNJ is about 55%. KO's market cap is about 12% higher. I could have picked any stocks for a FCF comparison.

    What I am saying is that the rapidly rising numbers are going to make it hard for the valuation to do anything but rise in relation to the market. GILD in my mind has better growth prospects short, medium and long term to any of the above.
    Feb 24, 2015. 12:35 PM | 4 Likes Like |Link to Comment
  • Gilead: All Is Still Well Down On The Farm [View article]
    I would add a few thoughts to this article.

    The market size being referred to is the US market and that also appears to be overly conservative suggesting no further growth while GILD is in the process of making new agreements.

    Each week the Trx and Nrx trends higher. Then internationally the market is growing rapidly and agreements overall are moving faster than expected. It would not surprise me iif the 2015 Hep C market is $20 billion with $15 billion US and $5 billion around the world.

    Then to quote ABBV is not exactly an unbiased source. Perhaps 27% penetration for an inferior regimen in Viekira but I doubt it and would suggest 10% might be a closer actual.

    On to the stock buyback the $15 billion is over 5 years. So I wouldnt suggest investors consider that as all happening in 2015 as the article insinuates.

    Those who bet the farm dont have a farm to bet. At the same time an investment in GILD is a very good risk to take. Anything can happen but most people do not think a 10-12 forward PE values GILD prospects appropriately. Most investors also think GILD will continue to find a way to grow as it has since the turn of the century.

    For those who cant understand the excitement about GILD just keep in mind that

    - last year GILD more than doubled Revenue and more than quadrupled profits

    - if you bought GILD at the Nasdaq market 5000+ peak in 2000 you are still up about 4600% and 360% over the past 3 years so GILD has richly rewarded its believers

    - NASH is as big as Hep C by many estimates and GILD has a strong chance of taking a large share to that market. Similar for Hep B.
    Feb 24, 2015. 10:52 AM | 13 Likes Like |Link to Comment
  • Investment Strategy Outlook [View article]
    A lot of words used to say nothing!
    Feb 22, 2015. 07:08 PM | 1 Like Like |Link to Comment
  • IBM: Buffett Inexplicably Doubles Down [View article]
    Right on Josh!

    Why take a risk on IBM with dreadful leadership? It is just not worth the risk to find out if they are less incompetent than most of us believe. Once they prove they arent destroying value I will invest again.

    As an investor what I believe has been proven is extreme incompetence and a lack of truthfulness with investors. Examples

    1) We are a cloud company statement IBM made a couple years ago. Meanwhile AMZN takes a major contract even though they had never been in the business before. IBM demands to appeal the award and is told they dont even qualify to be considered.

    2) We are not borrowing money to buy stock IBM leaders state... As debt explodes by roughly the share buyback amounts, IBM tells shareholders it is all equipment financing and they are really debt free.

    3) Driving business units into the ground on a regular basis demonstrates such vision. The optics of selling off the chip business and having to pay the buyer to take it illustrated what most of us think about the quality of the management.

    4) Were nearing the 2nd decade of hearing about game shows and how IBM's machine beat a contestant on the 2nd try. I would be shocked to find out he didnt receive income in the process. But really the point is I dont care!

    On to my major point which is that IBM could be less incompetent than the current consensus. They have been investing heavily in their businesses. Both ORCL and CSCO seem to have turned up recently in an industry view.

    IBM has bought back over 50% of their stock in recent years which may be a more rapid pace than the pace of decline under Rometty. One can never forget how profitable IBM really is and the margins in its businesses, and the 90% ROE.

    Buffett may have information that the rest of us do not. He may know that a CEO change is going to happen. He may know that activists are going to get involved. He may be able to cause change or even buy IBM thinking it is worth 50% more just by removing the current management.

    The rest of us ought to know more before walking onto the minefield.
    Feb 22, 2015. 11:05 AM | 2 Likes Like |Link to Comment
  • Don't Over Think It, Buy Johnson & Johnson [View article]
    Thanks for an interesting article!

    I think JNJ is an excellent value and a good purchase. I have owned JNJ for most of the time discussed. I sold JNJ when Weldon was the CEO and huge product defects popped up in every division and that was the period of the 15 PE. Upon his leaving I immediately bought JNJ back and was rewarded in a rapid manner.

    Right now JNJ is growth challenged in the near term and that is suppressing the valuation. I expect longer term 3-4% revenue growth and 7-8% earnings growth. That doesnt sound overly impressive until it is brought into perspective. A large number of the dividend achiever groupings are not able to grow revenue at all and are in slow decline.

    Some key points

    - JNJ is in a growing industry and the value is fair which has been difficult to find for long periods in its history.

    - As a non cyclical steady performer when the market crashes as it has many times in my tenure, JNJ tends to drop perhaps 8-10% when the market drops 20%

    - We are in a period where JNJ gets overlooked as many stocks have huge gains over several years. Over a decade or more not many companies can keep up with JNJ and we are in a long term game.

    - JNJ is one of the best risk adjusted growth companies in history. By that I mean its AAA credit rating, large pile of cash, steady business growth and solid dividend growth reduce risk to investors.

    - Numbers I like include $14.5 bil Free Cash Flow, $18+ bil Operating Cash flow, GM 69.3%, $33 bil Cash
    Feb 22, 2015. 09:38 AM | 7 Likes Like |Link to Comment
  • Is It Safe To Buy Treasuries Yet? [View article]
    DrX once again my is hat off to you!

    I am a recovering perma bond bear. However I am hard headed and after 33 consecutive years of being wrong I am emboldened by my clock is right twice a day potential.

    So my comment is that unfortunately I dont have a problem seeing the deflation in the world or the worlds attempt to devalue vs the dollar. Further I dont have a problem seeing the interest rate streak continue to 35 years, and I agree that I see no evidence that the trend has broken.

    As I see it your view has a few problems or issues

    - When things turn they may turn hard and fast with huge long duration impact, and I see 10 years as long duration.

    - Your target interest rate view suggests a significant wave of deflation which world economic leaders will fight hard to prevent. (note: I consider us in a deflationary scenario now given commodity prices and while that may have ended, I have not seen evidence of that either)

    - Finally I agree with you but I have been wrong for 33 consecutive years on bond rates.

    Enjoyed the article!
    Feb 21, 2015. 12:33 PM | 1 Like Like |Link to Comment
  • The Importance Of Diversification: Year One Of My DGI Journey, Part 2 [View article]
    Interesting article!

    It was good to see that you picked some quality companies for your portfolio. I will add a few thoughts.

    1) Like you I live and spend my money in the US and prefer US investments. I do have Euro exposure through ETF's but ignor emerging markets.

    2) You should be commended for investing in biotech such as GILD and AMGN. We are in the biotech century watching the $1 trilion pharma industry transition to biotech, but really you are simply buying growth at a similar price as traditional pharma many of which havent grown sales in the past decade. JNJ is not a biotech but a great holding.

    3) You admire Buffett so I would recommend purchasing his BRK-B share/s. This would help you in industrials and HON is an excellent company to find an entry point to get into long term.

    4) This investor has never liked Grocery Stores, Supermarkets, Airlines or Auto companies. Perhaps I should reconsider but I am not likely to do so near term.

    5) Take valuation out of the equation for a moment and ask if every company was fairly priced what would I want in my portfolio? It can help focus on growth and stability or whatever is important to you. Almost every investor attempts to buy cheap and most fail anyway. If that doesnt interest you find different prisms or ways to view the market.

    6) In recent years some of my best investments have come from making room for new ideas. Allowing me to invest small amounts at first into companies like DIS, UNP, GILD, ECL, CELG, AA, PANW, FTR, FB, AAPL.

    7) Recognize that some of investors greatest historic friends such as KO, GE, IBM, PG have the same or lower revenue as they had in 2011. I keep some of those for stability reasons. Just dont delude yourself that into thinking you are getting growth.

    8) Finally measure your results against a proper benchmark. If you arent getting proper returns then let a professional manage part or all, or consider a Vanguard approach for part of your money. Congrats on being able to accumulate some investment funds for the future, you are ahead of most already.

    Just a few thoughts and best of luck
    Feb 20, 2015. 11:10 AM | 1 Like Like |Link to Comment
  • Makers of pricey drugs working on new payment model [View news story]
    I can understand the industry thinking that an annuity approach to a $1 Million treatment sounds good.

    Some how all I can envision is getting a $1 Million treatment and paying for it the rest of my life. Perhaps a Million dollar treatment isnt much of a solution?
    Feb 20, 2015. 02:11 AM | 1 Like Like |Link to Comment
  • My Top Biotechnology Stocks For 2015 [View article]
    Thanks for an interesting article!

    I would comment that I do like the big players and own GILD, CELG, REGN, BIIB, AMGN. Your analysis would seem to do a respectable job of identifying those biotech companies poised to take over a larger share of the 1 trillion pharma business.

    On the smaller names, potential, pipelines and explosive growth areas are more important. RNA research, Genetics, personalized medicine, CAR-T for cancer and others as an example. For those which are riskier but also can provide 1000%+ returns the metrics used do not apply as well.

    Enjoyed the article!
    Feb 19, 2015. 11:00 AM | 4 Likes Like |Link to Comment
  • Procter & Gamble: 'The Most Significant Impact We Have Ever Incurred' [View article]
    I have owned PG for decades and still own some shares. It has provided a relative safe place to be in bear markets and used to provide excellent growth in good markets.

    What concerns me is that they have not grown or built anything of value in this century. The past 5 year return of 1.13% reflects my concern. Further, market fears have moved investors into PG so that it is trading at a 25 PE for projected earnings decline.

    The world is changing and pretending that PG is still a great investment is a mistake. Also I appreciate the article but I am unlikely to try to protect PG shares.
    Feb 19, 2015. 10:13 AM | Likes Like |Link to Comment
  • Gilead Sciences, Future Dividend Aristocrat In The Making [View article]
    Thanks for the article!

    I was trying to point out that lots of people only want to consider investing in Dividend Aristocrats, most of which ended their growth long ago. I own a number of Aristocrats, but I also try to get growth in my portfolios.

    GILD is an avenue for growth even if it wont be a dividend aristocrat any time soon. Nothing is wrong with looking ahead as well as behind. I am mixed on the dividend as I do like a growth company to feel they can achieve more with capital than the average yokel.

    Dont be afraid to consider Total Return in your investing. Huge quantities of investors here on SA will disagree with a religious fervor saying that the dividend is everything. I too like dividends but I also like growth.

    GILD is a wonderful growth company and I am a long term shareholder. Its growth in share price over the past few years spends just the same as a dividend should I decide to sell some day. Since March 2000 GILD is up 4500% and 342% over the past 3 years.
    Feb 19, 2015. 02:35 AM | 4 Likes Like |Link to Comment
  • Gilead Sciences, Future Dividend Aristocrat In The Making [View article]
    Wake up Doug, your dreaming!

    Few really care whether in 2040 GILD could become a dividend aristocrat.
    Feb 18, 2015. 09:59 AM | 5 Likes Like |Link to Comment
  • An Update On Gilead's 2015 Outlook [View article]
    This was in todays news

    Ray Dalio’s Bridgewater Associates revealed its top picks for the fourth quarter in a 13F Form filed with the U.S. Securities and Exchange Commission. Excluding its exchange-traded fund (ETF) holdings, the hedge fund’s largest position at the end of 2014 was in Gilead Sciences, Inc. (NASDAQ:GILD), with a stake of 537,300 shares.
    Read more at http://bit.ly/GUugpE
    Feb 18, 2015. 01:52 AM | Likes Like |Link to Comment
  • Celgene: Good Q4 2014, Outlook Is Good To Great Going Forward [View article]
    I enjoyed an excellent article!

    I own some CELG and would like to get more on a pullback.
    Feb 17, 2015. 02:17 PM | 1 Like Like |Link to Comment
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